The government is making a big push for electric vehicles. The growth forecast is high and the policy is clear. However, the uptake will depend on the ability of the state governments to create charging infrastructure. The policy field was cleared last year. The ministry of power clarified in Apr 2018 that charging stations do […]

The Asian Development Bank (ADB) has announced that it will invest $50 million in Indian renewable energy independent power producer Avaada Energy Private Limited. Avaada aims to use the capital to expand its solar energy generation capacity in India. The ADB and Avaada entered into an agreement which was signed by the chairman of the […]

Recognized as one the leading mining nations in the world Polish government has prepared ‘West Bengal Project’ that was discussed recently during Bengal Global Business Summit. Poland was partner country of the summit for a third time in a row. Poland looks for collaboration with both PSUs and the biggest private players. During a recent […]

India’s SpiceJet Ltd could benefit from cash-strapped Jet Airways being forced to ground planes, and the low-cost carrier is in talks with lessors to lease some of those aircraft, a person with direct knowledge of the matter told Reuters. Shares of SpiceJet rose as much as 7.2 percent on Wednesday in their biggest percentage gain […]

Indian companies are welcome to participate in Indonesia’s infrastructure projects, particularly in the Aceh province, as the island nation makes development a priority, a senior minister has said. Addressing a gathering of chief executives of the Indian companies at the 2nd India-Indonesia Infrastructure Forum (IIIF) in Jakarta, country’s Coordinating Minister of Maritime Affairs Luhut Binsar […]

Editorial- October 2018

The Supreme Court judgment of April 11, 2017 had ruled against force majeure claims of gencos on the change in law in Indonesia on imported coal. But, it allowed compensations in case of change in the Indian laws. That means the demand of tariff hike on imported coal was dismissed. The gencos involved are: Adani, Tatas and Essar. They, through different bidding processes, had signed agreements with discoms of five states – Gujarat, Haryana, Rajasthan, Maharashtra and Punjab – for supplying power at the prices they had quoted in their bids.

Adani Power Limited (APL) reneged on its contractual obligations, shuttering its power units. GUVNL made up for the shortfall in power supply by buying 6,749 MUs for four months (Mar-Jun 2018) from high cost sources like power exchange, bilateral and spot LNG. The average cost for this procurement was Rs 4.30 per unit, about Rs 2 more than the tariff agreed by APL. GUVNL shelled out Rs 1,300 crore more than what it would have paid APL had it insisted on contractual sanctity. The Gujarat government took the committee route to skirt the apex court order. Thus, a high powered committee was set up which suggested an increase in tariff through a change in policy route. It used the references of migration package allowed under National Telecom Policy 1999 and the levy of User Development Fee (UDF) at Delhi & Mumbai airports to build its rationale. It also referred to a power ministry advice of April 13, 2018, on a SBI reference to the central government for resolution of coal based projects in Gujarat. This power ministry communication had stated that Gujarat government could take steps to resolve issues. What it conveniently forgot to mention was the Supreme Court judgement had categorically ruled that force majeure was admissible only in case of changes in Indian law, for changes in foreign law, it was inapplicable.

It is undeniable that there are stressed assets in the power sector. Therefore, the central government has instituted a scheme called Pariwartan also known as Samadhan. The power ministry in consultation with the lenders recently constituted an ARC under the state-owned Rural Electrification Corporation (REC). This ARC, once registered, will house stressed operational power assets. The ARC will warehouse 10,000 MW of stressed power projects and salvage those from insolvency where lenders might have to take a minimum 50 per cent haircut. Lenders’ debt will be converted into equity in the plant. They will hold it for five years to realise better value, while the existing promoter will lose the equity in the plant completely. The former RBI governor Raghuram Rajan, in his recent submissions before a Parliamentary panel, has detailed the enormous mismatch between lender profile and promoter equity, how banks have even got sucked in by some promoters by inflated, over-invoiced imports etc.

Pariwartan is a process driven scheme with fair parameters, it is not individualised to favour this or that company. But what the Gujarat government is doing flies in the face of the central resolution scheme. Read our cover story for details.

The government is making a big push for electric vehicles. The growth forecast is high and the policy is clear. However, the uptake will depend on the ability of the state governments to create charging infrastructure. The policy field was cleared last year. The ministry of power clarified in Apr 2018 that charging stations do […]